Exhibit 1.1
EXECUTION COPY
Five Star Quality Care, Inc.
3,500,000 Shares
Common Stock
UNDERWRITING AGREEMENT
December 7, 2004
UNDERWRITING AGREEMENT
December 7, 2004
UBS Securities LLC
As Representative of the several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Five Star Quality Care, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "Underwriters") an aggregate of 3,500,000 shares of Common Stock,
$0.01 par value per share (the "Common Stock"), of the Company (the "Firm
Shares"). In addition, solely for the purpose of covering over-allotments, the
Company proposes to grant to the Underwriters the option to purchase from the
Company up to an additional 525,000 shares of Common Stock (the "Additional
Shares"). The Firm Shares and the Additional Shares are hereinafter collectively
sometimes referred to as the "Shares." The Shares are described in the
Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Act"), with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (File No. 333-119955) including a prospectus,
relating to the Shares. The Company has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(each thereof being herein called a "Preliminary Prospectus") relating to the
Shares. Except where the context otherwise requires, the registration statement,
as amended when it becomes effective, including all documents filed as a part
thereof, and including any information contained in a prospectus subsequently
filed with the Commission pursuant to Rule 424(b) under the Act and deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430(A) under the Act, and also including any registration statement filed
pursuant to Rule 462(b) under the Act, is herein called the "Registration
Statement," and the prospectus, in the form filed by the Company with the
Commission pursuant to Rule 424(b) under the Act on or before the second
business day after the date hereof (or such earlier time as may be required
under the Act) or, if no such filing is required, the form of final prospectus
included in the Registration Statement at the time it became effective, is
herein called the "Prospectus." Any reference herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the copy of the Registration Statement, Preliminary Prospectus or
Prospectus filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("XXXXX").
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The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. On the basis of the representations and warranties
herein and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each Underwriter and, upon the basis of the
representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions set forth herein, each
Underwriter agrees, severally and not jointly, to purchase from the Company,
at a purchase price of $7.943 per Share (the "purchase price per share"), the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A annexed hereto (or such number of Firm Shares increased as set
forth in Section 8 hereof).
The Company is advised by you that the Underwriters intend (i) to make a
public offering of their respective portions of the Firm Shares as soon after
the effective date of the Registration Statement as in your judgment is
advisable and (ii) initially to offer the Firm Shares upon the terms set forth
in the Prospectus. You may from time to time increase or decrease the public
offering price after the initial public offering to such extent as you may
determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the representations, warranties and
agreements of the Company and subject to the terms and conditions herein set
forth, the Underwriters shall have the right to purchase, severally and not
jointly, from the Company all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by you on
behalf of the several Underwriters at any time on or before the 30th day
following the date hereof by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "additional time
of purchase"); PROVIDED, HOWEVER, that the additional time of purchase shall not
be earlier than the time of purchase (as defined below) nor earlier than the
second business day1 after the date on which the option shall have been
exercised nor later than the tenth business day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine solely to eliminate fractional shares).
2. PAYMENT AND DELIVERY. Payment of the purchase price for the Firm Shares
shall be made to the Company by Federal Funds wire transfer, against delivery of
the certificates for the Firm Shares to you through the facilities of the
Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on December 13, 2004 (unless another time shall be agreed to
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1 As used herein "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
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by you and the Company or unless postponed in accordance with the provisions of
Section 8 hereof). The time at which such payment and delivery are actually made
is hereinafter called the "time of purchase." Electronic transfer of the Firm
Shares shall be made to you at the time of purchase in such names and in such
denominations as you shall specify, such specification to be made by you no
later than the second business day preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Electronic transfer of the Additional Shares shall
be made to you at the additional time of purchase in such names and in such
denominations as you shall specify, such specification to be made by you no
later than the second business day preceding the time of purchase.
Deliveries of the documents described in Section 6 below with respect to
the purchase of the Shares shall be made at the offices of Xxxxxxx Xxxx &
Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M., New York
City time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Underwriters that:
(a) the Company has not received nor has notice of any order of the
Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act; and when the
Registration Statement becomes effective, the Registration Statement
and the Prospectus will conform in all material respects with the
provisions of the Act, and the Registration Statement will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
PROVIDED, HOWEVER, that the Company makes no representation or
warranty with respect to any statement contained in the Registration
Statement or the Prospectus relating to information concerning the
Underwriters and furnished in writing by or on behalf of any
Underwriter through you to the Company expressly for use in the
Registration Statement or the Prospectus; and neither the Company nor
any of its affiliates has distributed any offering materials in
connection with the offer or sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, the Prospectus or
any other materials, if any, permitted by the Act;
(b) as of the date of this Agreement, the Company's authorized and
outstanding capitalization is as set forth in the section of the
Registration Statement and the Prospectus entitled "Capitalization"
and, as of the time of purchase and the additional time of purchase,
as the case may be, the Company's authorized and outstanding
capitalization shall be as set forth in the section of the
Registration Statement and the Prospectus entitled "Capitalization"
(subject to the issuance of Additional Shares at any
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additional time of purchase); all of the issued and outstanding shares
of capital stock of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws and were not
issued in violation of any preemptive or similar right;
(c) the Company has been duly incorporated and is existing as a
corporation in good standing under the laws of the State of Maryland,
with the requisite corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify in
any such jurisdiction would not, individually or in the aggregate,
have a material adverse effect on the business, prospects, properties,
condition (financial or otherwise) or results of operation of the
Company and the Subsidiaries (as hereinafter defined) taken as a whole
(a "Material Adverse Effect");
(e) the Company has no subsidiaries (as defined in the Act) other
than as listed in Schedule B annexed hereto (the "Subsidiaries");
except for Senior Living of Boynton Beach Limited Partnership and
except as described in the Registration Statement and the Prospectus,
the Company owns 100% of the outstanding capital stock or other equity
interests of the Subsidiaries; except for the Subsidiaries or as
described in the Registration Statement and the Prospectus, the
Company does not own, directly or indirectly, any long-term debt or
any equity interest in any firm, corporation, partnership, joint
venture, limited liability company, association or other entity;
complete and correct copies of the charter and bylaws or other
organizational documents of the Company and each of the Subsidiaries
and all amendments thereto have been made available to you; each of
the Subsidiaries has been duly incorporated or formed and is validly
existing as a corporation or other entity, as the case may be, in good
standing under the laws of the jurisdiction of its incorporation or
organization with the requisite corporate, trust, partnership or other
power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and
the Prospectus; each Subsidiary is duly qualified and in good standing
to do business as a foreign corporation in each jurisdiction listed on
Schedule B hereto, such jurisdictions being the only jurisdictions
where the ownership or leasing of the properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect; all of the
outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and
non-assessable, have been issued in compliance with all applicable
securities laws and were not issued in violation of any preemptive or
similar right;
(f) this Agreement has been duly authorized, executed and
delivered by the Company;
(g) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Registration Statement and
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the Prospectus; the certificates, if any, evidencing the Shares are in
due and proper form and conform in all material respects to the
requirements of the Maryland General Corporation Law (the "MGCL");
(h) the Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and non-assessable and free of
any preemptive or similar rights;
(i) neither the Company nor any of the Subsidiaries is in breach
or violation of, or in default under (and no event has occurred which
with notice, lapse of time, or both would result in any breach or
violation of, or constitute a default under) (each such breach,
violation or default, a "Default Event"), (i) its charter, bylaws or
other organizational documents, (ii) any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, bank loan or credit agreement, or any lease, contract or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
properties is bound or affected and (iii) any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of
their respective properties, other than, in the case of clauses (ii)
and (iii), such Default Events as would not, individually or in the
aggregate, have a Material Adverse Effect; and the execution, delivery
and performance of this Agreement, including the issuance and sale of
the Shares and the consummation of any other transactions contemplated
hereby, does not constitute and will not result in a Default Event
under (w) any provisions of the charter, bylaws or other
organizational documents of the Company or any of the Subsidiaries,
(x) under any provision of any indenture, mortgage, deed of trust,
bank loan or credit agreement, or any lease, contract or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of their respective properties
is subject, (y) under any applicable law, regulation or rule or (z)
under any decree, judgment or order of any court or governmental
agency or body having jurisdiction over the Company or any of its
Subsidiaries' properties, except, in the case of clauses (x), (y) and
(z) for such Default Events as would not, individually or in the
aggregate, have a Material Adverse Effect;
(j) no approval, authorization, consent or order of or filing
with any federal, state or local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company of any other transactions contemplated hereby, other than
registration of the offer and sale of the Shares under the Act, which
has been or will be effected, and any necessary qualification under
the securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriters;
(k) except as set forth in the Registration Statement and the
Prospectus (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it any shares of Common Stock or
shares of any other capital stock or other equity interests of the
Company, (ii) no person has any preemptive rights, resale rights,
rights of first refusal or other rights to purchase any shares of
Common Stock or shares of any other capital stock or other equity
interests of the Company and (iii) no person has the right to
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act as an underwriter, or as a financial advisor to the Company, in
connection with the offer and sale of the Shares, in the case of each
of the foregoing clauses (i), (ii) and (iii), whether as a result of
the filing or effectiveness of the Registration Statement or the sale
of the Shares as contemplated thereby or otherwise; no person has the
right, contractual or otherwise, to cause the Company to register
under the Act any shares of Common Stock or shares of any other
capital stock or other equity interests of the Company, or to include
any such shares or interests in the Registration Statement or the
offering contemplated thereby whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Shares
as contemplated thereby or otherwise, except for such rights as have
been complied with or waived;
(l) Ernst & Young LLP, whose reports on (i) the consolidated
financial statements of the Company and (ii) the consolidated
financial statements of LTA Holdings, Inc. and its subsidiaries are
filed with the Commission as part of the Registration Statement and
the Prospectus, are independent public accountants as required by the
Act;
(m) all legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(n) except as disclosed in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of
the Subsidiaries is a party or of which any of their respective
properties is subject which, if adversely decided, would result in a
judgment, decree or order having a Material Adverse Effect or prevent
consummation of the transactions contemplated hereby; without limiting
the foregoing, the Company and the Subsidiaries are in compliance with
applicable provisions of federal or state laws governing Medicare or
any state Medicaid programs, including, without limitation, Sections
1320a-7a and 1320a-7b of Title 42 of the United States Code, except
for such provisions the violation of which would not, individually or
in the aggregate, have a Material Adverse Effect; no individual with
an ownership or control interest, as defined in 42
U.S.C.ss.1320a-3(a)(3), in the Company or any of the Subsidiaries, or
who is an officer, director or managing employee as defined in 42
X.X.X.xx. 1320a-5(b), of the Company or any of the Subsidiaries is a
person described in 42 X.X.X.xx. 1320a-7(b)(8)(B), except as would
not, individually or in the aggregate, have a Material Adverse Effect;
and the Company's and each of the Subsidiaries' business practices are
in compliance with federal or state laws regarding physician ownership
of (or financial relationship with) and referral to entities providing
healthcare related goods or services, or laws requiring disclosure of
financial interests held by physicians in entities to which they may
refer patients for the provisions of health care related goods or
services, except for those laws, the violation of which, individually
or in the aggregate, would not have a Material Adverse Effect; except
as disclosed in the Prospectus, there are no Medicare, Medicaid or any
other recoupment or recoupments of any governmental or private health
care payor being sought, requested or claimed or, to the Company's
knowledge,
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threatened against the Company or any of the Subsidiaries, which
individually or in the aggregate would result in a Material Adverse
Effect; and
(o) to the Company's knowledge and except as disclosed in the
Registration Statement and the Prospectus, there are no legal or
governmental proceedings pending or threatened to which any lessor of
any property which the Company is a lessee is a party or of which any
of the properties the Company leases is subject at law or in equity,
or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency which, if
adversely decided, would result in a judgment, decree or order having
a Material Adverse Effect or prevent consummation of the transactions
contemplated hereby;
(p) except as disclosed in the Registration Statement and
Prospectus, (i) neither the Company nor any of the Subsidiaries has
received from any governmental authority written notice of any
violation of any local, state or federal law, rule or regulation
including without limitation any such law, rule or regulation
applicable to the health care industry ("Health Care Laws") or
relating to human health or safety or the environment or any hazardous
or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") and (ii) to the Company's knowledge, there is
no such violation or any occurrence or circumstance that would give
rise to a claim under or pursuant to any local, state or federal law,
rule or regulation (including, without limitation, any Health Care
Laws or Environmental Laws), which, in the case of clauses (i) and
(ii), would, individually or in the aggregate, have a Material Adverse
Effect;
(q) to the Company's knowledge and except as disclosed in the
Registration Statement and Prospectus, (i) there is no violation of
any local, state or federal law, rule or regulation (including,
without limitation, Health Care Laws and Environmental Laws) by any
person from whom the Company or any of the Subsidiaries acquired or
leased any of its properties (a "seller"), or any sublessee or
operator of any of their respective properties or any part thereof and
(ii) there is no such violation or any occurrence or circumstance that
would give rise to a claim under or pursuant to any local, state or
federal law, rule or regulation (including, without limitation, any
Health Care Laws or Environmental Laws), which, in the case of clauses
(i) and (ii) would, individually or in the aggregate, have a Material
Adverse Effect;
(r) no written notice of any condemnation of or zoning change
affecting the properties or any part thereof of the Company or any of
the Subsidiaries has been received, or, to the Company's knowledge,
threatened, that if consummated would, individually or in the
aggregate, have a Material Adverse Effect; to the Company's knowledge,
no seller, sublessee or operator of any property, or portion thereof,
of the Company or any of the Subsidiaries has received from any
governmental authority any written notice of any condemnation of or
zoning change affecting the Properties or any part thereof of the
Company or any of the Subsidiaries that, individually or in the
aggregate, would have a Material Adverse Effect;
(s) the Company and each of the Subsidiaries have good title to
all real and personal property owned by them as described in the
Registration Statement and the
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Prospectus, free and clear of all liens, encumbrances and defects
except such as are described in the Registration Statement and the
Prospectus or such as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; except as
described in the Registration Statement and the Prospectus, any real
property and buildings held under lease by the Company or any of the
Subsidiaries are held by it under valid, subsisting and enforceable
leases, except as enforcement thereof may be limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance, or other similar laws,
affecting the enforcement of creditor's rights generally and by
general equitable principles, with such exceptions as would not have a
material adverse effect on use made and proposed to be made of such
property and buildings by the Company or any of the Subsidiaries, as
the case may be;
(t) the Company and each of the Subsidiaries and, to the
Company's knowledge, each of the operators, lessors or sublessees of
any property or portion thereof of the Company or any of the
Subsidiaries have such permits, licenses, approvals, certificates,
franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
Health Care Laws or Environmental Laws, as are necessary in the case
of each such party to acquire and own, lease or operate its properties
and to conduct its business, all as described in the Prospectus,
except where the failure to obtain such permits would not,
individually or in the aggregate, have a Material Adverse Effect;
except as described in the Prospectus, the Company and each of the
Subsidiaries and, to the Company's knowledge, each of the lessees,
sublessees or operators of any property or portion thereof of the
Company or any of the Subsidiaries have fulfilled and performed all of
their obligations with respect to such permits and, except as
disclosed in the Prospectus, no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or result in any other impairment of the rights of the holder
of any such permit, except where the failure to fulfill or perform, or
the resulting termination or impairment, would not, individually or in
the aggregate, have a Material Adverse Effect;
(u) the financial statements, together with the related schedules
and notes, included in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company and
the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and the
Subsidiaries for the periods specified and have been prepared in
compliance with the requirements of the Act and in conformity with
generally accepted accounting principles applied on a consistent basis
during the periods involved; all pro forma financial statements and
other pro forma financial data included in the Registration Statement
and the Prospectus comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X of the Act, and
the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements; the other financial
and statistical data set forth in the Registration Statement and the
Prospectus are accurately presented and prepared on a basis consistent
with such financial statements and books and records of the Company;
all disclosures contained in the Registration Statement or the
Prospectus regarding "non-GAAP financial measures" (as such term is
defined by the rules and regulations of the Commission) comply with
Regulation G of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder
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(collectively, the "Exchange Act") and Item 10 of Regulation S-K under
the Act, to the extent applicable; and there are no financial
statements (historical or pro forma) that are required to be included
in the Registration Statement and the Prospectus that are not included
as required;
(v) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been (i) any material adverse change, or any prospective material
adverse change, in the business, properties, condition (financial or
otherwise) or results of operations of the Company and the
Subsidiaries taken as a whole, (ii) any transaction which is material
to the Company or the Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent, which is material to the Company and
the Subsidiaries taken as a whole, incurred by the Company or the
Subsidiaries, (iv) any change in the outstanding capital stock (other
than issuances of Common Stock upon the exercise of options described
as outstanding in the Registration Statement and Prospectus), or at
any additional time of purchase, any material change in outstanding
capital stock, (v) any increase in outstanding indebtedness of the
Company or the Subsidiaries, or at any additional time of purchase,
any material increase in outstanding indebtedness or (vi) any dividend
or distribution of any kind declared, paid or made on the capital
stock of the Company; neither the Company nor any of the Subsidiaries
has any material contingent obligation which is not disclosed in the
Registration Statement and the Prospectus;
(w) each of the Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are customary in the business in
which they are engaged, except as described in the Prospectus; except
as would not, individually or in the aggregate, have a Material
Adverse Effect, all policies of insurance insuring the Company and the
Subsidiaries or any of their businesses, assets, employees, officers,
directors and trustees are in full force and effect, and the Company
and the Subsidiaries are in compliance with the terms of such policies
in all material respects; except as would not, individually or in the
aggregate, have a Material Adverse Effect, there are no claims by the
Company or any of the Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending
under a reservation of rights clause;
(x) except as disclosed in the Registration Statement, neither
the Company nor any of the Subsidiaries has either sent or received
any communication regarding termination of, or intent not to renew,
any of the contracts or agreements referred to or described in, or
filed as an exhibit to, the Registration Statement, and no such
termination or non-renewal has been threatened by the Company or any
of the Subsidiaries or any other party to any such contract or
agreement;
(y) neither the Company nor any of the Subsidiaries nor any of
their respective affiliates has taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act, or otherwise,
in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares;
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(z) neither the Company nor any of the Subsidiaries has sustained
since the date of the latest financial statements included in the
Prospectus any losses or interferences with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus or other than any losses or
interferences which would not, individually or in the aggregate, have
a Material Adverse Effect;
(aa) the Company has obtained for the benefit of the Underwriters
an agreement (a "Lock-Up Agreement"), in the form set forth as EXHIBIT
A hereto, of Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx and the executive
officers of the Company; the Company will not release or purport to
release any person from any Lock-Up Agreement without the prior
written consent of UBS Securities LLC;
(bb) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds as
described in the Prospectus, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(cc) any statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company
believes to be reliable and accurate, and the Company has obtained the
written consent to the use of such data from such sources to the
extent required;
(dd) the Company and each of the Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;
(ee) the Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act) and such disclosure controls and
procedures are designed to ensure that material information relating
to the Company, including its consolidated Subsidiaries, is made known
to the Company's Chief Executive Officer and its Chief Financial
Officer by others within those entities, and such disclosure controls
and procedures are effective to perform the functions for which they
were established; the Company's auditors and the Audit Committee of
the Board of Directors have been advised by the Company's Chief
Executive Officer and Chief Financial Officer of (i) any significant
deficiencies in the design or operation of the Company's internal
control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize,
and report financial information and (ii) any fraud, whether or not
material,
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that involves management or other employees who have a significant
role in the Company's internal control over financial reporting; any
material weaknesses in the Company's internal control over financial
reporting have been identified for the Company's auditors; and since
the date of the most recent evaluation of such disclosure controls and
procedures, there has been no change in the Company's internal control
over financial reporting or in other factors that has materially
affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting;
(ff) the Company has provided you true, correct, and complete
copies of all documentation pertaining to any extension of credit in
the form of a personal loan made, directly or indirectly, by the
Company to any director or executive officer of the Company, or to any
family member or affiliate of any director or executive officer of the
Company; and since July 30, 2002, the Company has not, directly or
indirectly, including through any Subsidiary (i) extended credit,
arranged to extend credit, or renewed any extension of credit, in the
form of a personal loan, to or for any director or executive officer
of the Company, or to or for any family member or affiliate of any
director or executive officer of the Company or (ii) made any material
modification, including any renewal thereof, to any term of any
personal loan to any director or executive officer of the Company, or
any family member or affiliate of any director or executive officer,
which loan was outstanding on July 30, 2002;
(gg) the Company has taken all necessary actions to ensure that,
upon and at all times after the effectiveness of the Registration
Statement, the Company and the Subsidiaries and, to the Company's
knowledge, any of the officers and directors of the Company and any of
the Subsidiaries, in their capacities as such, will be in compliance
in all material respects with the applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated
thereunder;
(hh) the Company and the Subsidiaries have filed all federal,
state, local and foreign tax returns and tax forms required to be
filed; such returns and forms are complete and correct in all material
respects, and all taxes shown by such returns or otherwise assessed
that are due or payable have been paid, except such taxes as are being
contested in good faith and as to which adequate reserves have been
provided; all payroll withholdings required to be made by the Company
and the Subsidiaries with respect to employees have been made except
where the failure to fulfill or perform, would not, individually or in
the aggregate, have a Material Adverse Effect; the charges, accruals
and reserves on the books of the Company and the Subsidiaries in
respect of any tax liability for any year not finally determined are
adequate to meet any assessments or reassessments for additional
taxes; there have been no tax deficiencies asserted and, to the
Company's knowledge, no tax deficiency might be reasonably asserted or
threatened against the Company and/or the Subsidiaries that would,
individually or in the aggregate, have a Material Adverse Effect;
(ii) the outstanding Common Stock is, and the Shares will be,
subject to satisfactory distribution information, listed on the
American Stock Exchange (the "AMEX"); and
11
(jj) the transactions contemplated by that certain Agreement and
Plan of Merger, dated as of September 23, 2004, by and among the
Company, FVE Acquisition Inc. and LTA Holdings, Inc. were consummated
on November 19, 2004, substantially on the terms and conditions set
forth therein; and
(kk) other than as set forth in the Registration Statement and
the Prospectus, or as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company and the Subsidiaries own,
possess, license or have other rights to use, all patents, trademarks,
servicemarks, trade names, copyrights, trade secrets, information,
proprietary rights and processes necessary for their business as
described in the Registration Statement and the Prospectus.
In addition, any certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters in connection with the
offering of the Shares shall be deemed to be a representation and warranty by
the Company, as to matters covered thereby, to each Underwriter.
4. CERTAIN COVENANTS OF THE COMPANY. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Shares; PROVIDED that the Company shall not be
required to qualify as a foreign corporation or to consent to the
service of process under the laws of any such state (except service of
process with respect to the offering and sale of the Shares); and to
promptly advise you of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for
sale in any jurisdiction or the initiation or threat of any proceeding
for such purpose;
(b) to make available to the Underwriters in New York City, as
soon as practicable after the Registration Statement becomes
effective, and thereafter from time to time to furnish to the
Underwriters, as many copies of the Prospectus (or of the Prospectus
as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may reasonably request for
the purposes contemplated by the Act; in case any Underwriter is
required to deliver a prospectus after the nine-month period referred
to in Section 10(a)(3) of the Act in connection with the sale of the
Shares, the Company will prepare promptly upon request, but at its
expense, such amendment or amendments to the Registration Statement
and such prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act;
(c) to advise you promptly and (upon your request) to confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes
effective and (ii) if Rule 430A under the Act is used, when the
Prospectus is filed with the Commission pursuant to Rule 424(b) under
the Act (which the Company agrees to file in a timely manner under
such rules);
12
(d) to advise you promptly, confirming such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for,
or the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop
order suspending the effectiveness of the Registration Statement, to
make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise you promptly of any proposal to
amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which you shall object in
writing;
(e) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(f) to furnish to you and, upon request, to each of the other
Underwriters for a period of two years from the date of this Agreement
(i) copies of any reports or other communications which the Company
shall send to its stockholders or shall from time to time publish or
publicly disseminate, (ii) copies of all annual, quarterly and current
reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, (iii)
copies of documents or reports filed with any national securities
exchange on which any class of securities of the Company is listed and
(iv) such other information as you may reasonably request regarding
the Company or any of the Subsidiaries, in each case as soon as such
communications, documents or information become available; provided,
however, that in no case shall the Company be required to furnish
materials pursuant to this paragraph which are filed and publicly
accessible through XXXXX;
(g) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Act
which, in the judgment of the Company, would require the making of any
change in the Prospectus then being used so that the Prospectus would
not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to
the Underwriters promptly such amendments or supplements to such
Prospectus as may be necessary to reflect any such change and to
furnish you a copy of such proposed amendment or supplement before
filing any such amendment or supplement with the Commission;
(h) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will
satisfy the provisions of Section 11(a) of the Act) covering a period
of twelve months beginning after the effective date of the
Registration Statement (as defined in Rule 158(c) of the Act) and
ending not later than 15 months thereafter;
(i) to furnish to you one conformed copy of the Registration
Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and sufficient
additional conformed copies (other than exhibits)
13
for distribution of a copy to each of the other Underwriters;
(j) to furnish to you as early as practicable prior to the time
of purchase and the additional time of purchase, as the case may be,
but not later than two business days prior thereto, a copy of the
latest available unaudited interim consolidated financial statements,
if any, of the Company and the Subsidiaries which have been read by
the Company's independent certified public accountants, as stated in
their letter to be furnished pursuant to Section 6(d) hereof;
(k) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of proceeds" in the
Prospectus;
(l) to pay all expenses, fees and taxes in connection with (i)
the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing
and shipment), (ii) the issuance, sale and delivery of the Shares by
the Company, (iii) the word processing and/or printing of this
Agreement, any Agreement Among Underwriters and any dealer agreements
and the reproduction and/or printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing
and shipment), each relating to the offer and sale of the Shares, (iv)
the qualification of the Shares for offering and sale under state laws
and the determination of their eligibility for investment under state
law as aforesaid (including the legal fees and filing fees and other
disbursements of counsel to the Underwriters) and the printing and
furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (v) the filing for review
of the public offering of the Shares by NASD Regulation, Inc.
(including the legal fees and filing fees and other disbursements of
counsel to the Underwriters with respect thereto), (vi) any listing of
the Shares on any securities exchange and any registration thereof
under the Exchange Act and (vii) the performance of the Company's
other obligations under this Agreement;
(m) for so long as the delivery of the Prospectus is required in
connection with the offer or sale of the Shares, to furnish to you a
reasonable period of time before filing with the Commission, a copy of
any document proposed to be filed pursuant to Section 13, 14 or 15(d)
of the Exchange Act;
(n) to not take, directly or indirectly, any action designed to
or which may constitute or which might cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares;
(o) not to (i) sell, offer to sell, contract to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose
of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16
of the Exchange Act with respect to, any Common Stock of the Company
or any securities convertible into or exercisable or exchangeable for
Common Stock, (ii) enter
14
into any swap or other arrangement tha transfers to another, in whole
or in part, any of the economic consequences of ownership of Common
Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, whether any such transaction is to be
settled by delivery of Common Stock or such other securities, in cash
or otherwise, (iii) publicly announce an intention to effect any
transaction specified in clause (i) or (ii), or (iv) file or cause to
be declared effective a registration statement under the Act relating
to the offer and sale of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock or
other rights to purchase Common Stock or any other securities of the
Company that are substantially similar to Common Stock, for a period
of 90 days after the date hereof (the "Lock-up Period"), without the
prior written consent of UBS Securities LLC, except for (A) the
registration of the Shares and the sales to the Underwriters pursuant
to this Agreement, (B) issuances of Common Stock upon the exercise of
options or warrants disclosed as outstanding in the Registration
Statement and the Prospectus, (C) the issuance of employee stock
options not exercisable during the Lock-up Period pursuant to stock
option plans described in the Registration Statement and the
Prospectus, (D) issuances of Common Stock as partial or full payment
for businesses directly or indirectly acquired or to be acquired by
the Company or its Subsidiaries, provided that the Company shall have
conditioned such issuances of Common Stock upon agreement of the
recipients to the restrictions of this paragraph and (E) the issuance
of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock to the directors of the
Company at the meeting of the Board of Directors of the Company
following the Company's annual meeting of stockholders to be held in
2005 as disclosed in the Registration Statement and Prospectus,
PROVIDED, HOWEVER, that if (x) during the period that begins on the
date that is 15 calendar days plus 3 business days before the last day
of the Lock-up Period and ends on the last day of the Lock-up Period,
the Company issues a earnings release or material news or a material
event relating to the Company occurs, or (y) prior to the expiration
of the Lock-up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of
the Lock-up Period, the restrictions set forth in this Section 4(o)
shall continue to apply until the expiration of the date that is 15
calendar days plus 3 business days after the date on which the
issuance of the earnings release or the material news or material
event occurs; and
(p) subject to Section 4(m) hereof, to file promptly all reports
and any definitive proxy or information statement required to be filed
by the Company with the Commission in order to comply with the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares, and to promptly notify you of such
filing.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are not delivered
for any reason other than the termination of this Agreement pursuant to clause
(ii), (iii) or (iv) of the second paragraph of Section 7 hereof or pursuant to
the last paragraph of Section 8 hereof or the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
agrees, in addition to paying the amounts described in Section 4(l) hereof, to
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of their counsel.
15
6. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company on the date hereof and at the time of
purchase (and the several obligations of the Underwriters at the additional time
of purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof and at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of Xxxxxxxx
& Worcester LLP, counsel for the Company, addressed to the Underwriters,
and dated the time of purchase or the additional time of purchase, as the
case may be, with reproduced copies for each of the other Underwriters and
in a form satisfactory to Xxxxxxx Xxxx & Xxxxxxxxx LLP, counsel for the
Underwriters, stating that:
(i) the Company is duly qualified to transact business and is in
good standing in each of the jurisdictions set forth on Schedule B
hereto; each Subsidiary listed on Schedule B hereto (other than the
Delaware Subsidiaries and the Maryland Subsidiaries (as defined
below)), each Subsidiary listed on Schedule C hereto (collectively,
the "Delaware Subsidiaries") and each Subsidiary listed on Schedule D
hereto (collectively, the "Maryland Subsidiaries") is each duly
qualified as a foreign corporation or other legal entity and in good
standing in each of the jurisdictions set forth on Schedule B hereto;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company, and is a legal, valid and binding agreement
of the Company, enforceable in accordance with its terms, except as
enforcement of the same may be limited by bankruptcy, insolvency,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles and except as to those provisions relating to indemnities
for liabilities arising under the Act as to which no opinion need be
expressed;
(iii) the Registration Statement and the Prospectus (except as to
the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Act;
(iv) the Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the Act and any
required filing of the Prospectus, and any supplement thereto pursuant
to Rule 424 under the Act, has been made in the manner and within the
time period required by such Rule 424;
16
(v) each Delaware Subsidiary is a corporation or other legal
entity duly formed, existing and in good standing under the laws of
its jurisdiction of organization. Each Delaware Subsidiary has the
corporate, trust, partnership or other power to own or hold under
lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact to the
extent described in the Registration Statement and Prospectus. All of
the issued and outstanding shares of beneficial ownership or shares of
capital stock of, or other ownership interests in, each Delaware
Subsidiary have been duly authorized and validly issued, are fully
paid and except as to Delaware Subsidiaries that are limited liability
companies or partnerships, non-assessable; and, to such counsel's
knowledge, all issued and outstanding shares of beneficial ownership
or shares of capital stock of, or other ownership interests in, each
Delaware Subsidiary and each Maryland Subsidiary are owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien or encumbrance, except as
disclosed in the Registration Statement and Prospectus;
(vi) the execution, delivery and performance of this Agreement by
the Company and the transactions contemplated hereby do not and will
not result in a Default Event under (nor constitute any event which
with notice, lapse of time, or both, would result in any breach of, or
constitute a Default Event under) (A) any provisions of the charter or
by-laws or other organizational documents of the Delaware
Subsidiaries, (B) any provision of any agreement or other instrument
to which the Company or any of the Delaware Subsidiaries is a party or
by which their respective properties may be bound or affected, that is
described in the Prospectus or filed as an exhibit to the Registration
Statement or is otherwise known to such counsel, (C) any federal,
state, local or foreign law, regulation or rule, or any decree, to
which the Company or the Delaware Subsidiaries may be subject, other
than, in the case of clauses (B) and (C), such Default Events as would
not, individually or in the aggregate, have a Material Adverse Effect;
(vii) to such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement or to
be described in the Prospectus which have not been so filed or
described;
(viii) to such counsel's knowledge, except as described in the
Prospectus or as would not, individually or in the aggregate, have a
Material Adverse Effect, there are no private or governmental actions,
suits, claims, investigations or proceedings pending, threatened or
contemplated to which the Company or any of the Delaware Subsidiaries
or any of their officers is subject or of which any of their
properties is subject, whether at law, in equity or before or by any
federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency;
17
(ix) to such counsel's knowledge, no person has the right,
pursuant to the terms of any contract, agreement or other instrument
described in or filed as an exhibit to the Registration Statement, to
cause the Company to register under the Act any shares of beneficial
interest or other equity interests as a result of the filing or
effectiveness of the Registration Statement or the sale of the Shares
as contemplated hereby, except for such rights as have been complied
with or waived; and to the knowledge of such counsel, except as
described in the Registration Statement and Prospectus, no person is
entitled to registration rights with respect to shares of capital
stock or other securities of the Company;
(x) the Company is not, and after the offering and sale of the
Shares and the application of the proceeds as described in the
Prospectus, will not be, an "investment company," or an entity
controlled by an "investment company," as such terms are defined in
the Investment Company Act; and
(xi) to such counsel's knowledge, the statements in the
Registration Statement and the Prospectus under the captions "Business
- Communities Leased From Senior Housing and Managed by Sunrise",
"Business - Our Senior Housing Leases", "Business - Sunrise Management
Agreements", "Business - Government Regulation and Reimbursement",
"Business - Environmental Matters" in each case insofar as such
statements purport to summarize matters arising under Massachusetts or
New York law or the federal law of the United States, or provisions of
documents as to which the Company is a party specifically referred to
therein, are accurate in all material respects.
Also, such counsel shall state that it has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants of the Company and representatives of the
Underwriters at which the contents of the Registration Statement and Prospectus
were discussed and, although such counsel is not passing upon and does not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus (except as and
to the extent stated in subparagraph (xi) above), on the basis of the foregoing
nothing has come to the attention of such counsel that causes them to believe
that the Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus or any supplement thereto at the date of the Prospectus
Supplement or such other supplement, and at all times up to and including the
time of purchase or additional time of purchase, as the case may be, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial and statistical data and
exhibits included or incorporated by reference in the Registration Statement or
Prospectus).
18
(b) The Company shall furnish to you at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of Xxxxxxx
LLP, special Maryland counsel of the Company, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in form satisfactory to Xxxxxxx Xxxx & Xxxxxxxxx LLP,
counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated, is existing as a
corporation in good standing under the laws of the State of Maryland,
with corporate power to own, lease and operate its properties and
conduct its business in all material respects as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as herein
contemplated;
(ii) each Subsidiary of the Company identified on Schedule D
hereto (each a "Maryland Subsidiary") is a corporation or other legal
entity duly formed, existing and in good standing under the laws of
its jurisdiction of organization. Each Maryland Subsidiary has the
corporate or other power to own or hold under lease the properties it
purports to own or hold under lease and to transact the business it
transacts and proposes to transact. All of the issued and outstanding
shares of capital stock of each Maryland Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and
are owned by the Company, directly or through subsidiaries;
(iii) the execution, delivery and performance of this Agreement
by the Company and the transactions contemplated hereby and by the
Registration Statement do not and will not conflict with, or result in
any breach of, or constitute a default under (nor constitute any event
which with notice, lapse of time, or both, would result in any breach
of, or constitute a default under) (A) any provisions of the Articles
of Amendment and Restatement, charter or by-laws or other
organizational documents of the Company or any of the Maryland
Subsidiaries or (B) any local or state Maryland law or administrative
regulation applicable to the Company and the Maryland Subsidiaries;
(iv) the Company has authorized and outstanding shares of capital
stock as set forth in the Registration Statement and the Prospectus;
the outstanding shares of capital stock of the Company have been duly
and validly authorized and issued by all necessary corporate action
and are fully paid, nonassessable and free of any preemptive rights,
resale rights, rights of first refusal and similar rights under the
MGCL; the Shares, when issued, will be duly and validly authorized and
issued by all necessary corporate action, fully paid, nonassessable
and free of any preemptive rights, resale rights, rights of first
refusal and similar rights under the MGCL; and the certificates for
the Shares are in due and proper form and conform in all material
respects to the requirements of the MGCL;
19
(v) no approval, authorization, consent or order of or filing
with any Maryland governmental or regulatory commission, board, body,
authority or agency having jurisdiction over the Company is required
in connection with the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares being delivered at the
time of purchase and at the additional time of purchase, as the case
may be, and the consummation of the transactions contemplated hereby
and by the Prospectus (in rendering the opinion expressed in this
paragraph (v), such counsel need express no opinion concerning the
securities laws of the State of Maryland.);
(vi) to such counsel's knowledge, the statements in the
Registration Statement and the Prospectus under the captions
"Description of capital stock" and "Material provisions of Maryland
law, our charter and bylaws" and in each case insofar as such
statements purport to summarize matters arising under Maryland law are
accurate in all material respects; and
(vii) to such counsel's knowledge, neither the Company nor any of
the Maryland Subsidiaries is in violation of its charter or by-laws or
other organizational documents or in violation of any local or state
Maryland law or administrative regulation applicable to the Company
and the Maryland Subsidiaries.
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxxxx
Xxxx & Xxxxxxxxx LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, with
respect to the issuance and sale of the Shares by the Company, the
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Underwriters may require. In
addition, Xxxxxxx Xxxx & Xxxxxxxxx LLP may rely on the opinion of Xxxxxxx
LLP as to all matters of Maryland law.
(d) You shall have received from Ernst & Young LLP letters dated,
respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by Xxxxxxx Xxxx & Xxxxxxxxx LLP, counsel for the
Underwriters.
(e) No amendment or supplement to the Registration Statement or
Prospectus, or document which upon filing with the Commission would be
incorporated by reference therein, shall at any time have been filed to
which you have objected in writing.
(f) The Registration Statement shall have become effective not later
than 5:30 PM New York City time on the date of this Agreement and, if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 PM New
York City time on the second full business day after the date of this
Agreement.
20
(g) Prior to the time of purchase or the additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and (iii) the Prospectus and
all amendments or supplements thereto, or modifications thereof, if any,
shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
(h) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no
material and adverse change or any prospective material and adverse change
(other than as specifically described in the Registration Statement and
Prospectus), in the business, properties, condition (financial or
otherwise) or results of operations of the Company and the Subsidiaries,
taken as a whole, shall occur or become known and (ii) no transaction which
is material and adverse to the Company and the Subsidiaries of the Company
taken as a whole shall have been entered into by the Company or any of the
Subsidiaries.
(i) You shall have received the letters referred to in Section 3(aa).
(j) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to you a certificate signed by two of
the Company's executive officers to the effect that the representations and
warranties of the Company as set forth in this Agreement are true and
correct as of each such date, that the Company has performed such of its
obligations under this Agreement as are to be performed at or before the
time of purchase and at or before the additional time of purchase, as the
case may be, and the conditions set forth in paragraphs (f), (g) and (h) of
this Section 6 have been met.
(k) The Shares shall have been approved for listing for quotation on
the AMEX, subject only to notice of issuance at or prior to the time of
purchase or the additional time of purchase, as the case may be.
(l) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and
the additional time of purchase, as the case may be, as you may reasonably
request.
7. EFFECTIVE DATE OF AGREEMENT; TERMINATION. This Agreement shall become
effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
21
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
50% of the Firm Shares (i) if, since the time of execution of this Agreement or
the respective dates as of which information is given in the Registration
Statement and Prospectus, there has been any material adverse and unfavorable
change, financial or otherwise (other than as referred to in the Registration
Statement and Prospectus), in the business, prospects, properties, condition
(financial or otherwise) or results of operations of the Company and the
Subsidiaries taken as a whole, which would, in your judgment or in the judgment
of such group of Underwriters, make it impracticable to market the Shares or
(ii) if, at any time prior to the time of purchase or, with respect to the
purchase of any Additional Shares, the additional time of purchase, as the case
may be, trading in securities on the NYSE, the American Stock Exchange or the
Nasdaq Stock Market Inc. ("Nasdaq") shall have been suspended or limitations or
minimum prices shall have been established on the NYSE, the American Stock
Exchange or the Nasdaq or (iii) if, at any time prior to the time of purchase
or, with respect to the purchase of any Additional Shares, the additional time
of purchase, as the case may be, a banking moratorium shall have been declared
either by the United States or New York State authorities or (iv) if, at any
time prior to the time of purchase or, with respect to the purchase of any
Additional Shares, the additional time of purchase, as the case may be, the
United States shall have declared war in accordance with its constitutional
processes or there shall have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on the financial markets of the United States as, in
your judgment or in the judgment of such group of Underwriters, to make it
impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this Agreement as
provided in this Section 7, the Company and each other Underwriter shall be
notified promptly by letter, telegram or telecopy.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(l), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS. Subject to Sections 6 and 7, if
any Underwriter shall default in its obligation to purchase and pay for the Firm
Shares to be purchased by it hereunder (otherwise than for a reason sufficient
to justify the termination of this Agreement under the provisions of Section 7
hereof) and if the number of Firm Shares which all Underwriters so defaulting
shall have agreed but failed to purchase and pay for does not exceed 10% of the
total number of Firm Shares, the non-defaulting Underwriters shall purchase and
pay for (in addition to the aggregate number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Firm Shares shall be purchased and paid for by such non-defaulting Underwriter
or Underwriters in such amount or amounts as you may designate with the consent
of each Underwriter so designated or, in the event no such designation is made,
22
such Firm Shares shall be purchased and paid for by all non-defaulting
Underwriters pro rata in proportion to the aggregate number of Firm Shares set
opposite the names of such non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the Underwriters or
by the Company for a defaulting Underwriter or Underwriters in accordance with
the foregoing provision, the Company or you shall have the right to postpone the
time of purchase for a period not exceeding five business days in order that any
necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with like effect as if such
substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
terminate without further act or deed and without any liability on the part of
the Company to any non-defaulting Underwriter and without any liability on the
part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors, officers, employees and agents and any
person who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made
23
therein not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished by or on behalf of any Underwriter through you to the
Company expressly for use with reference to such Underwriter in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or such
Prospectus or necessary to make such information not misleading, (ii) any untrue
statement or alleged untrue statement made by the Company in Section 3 of this
Agreement or the failure by the Company to perform when and as required any
agreement or covenant contained herein or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or, with
the approval of the Company, on behalf of the Company including, without
limitation, slides, videos, films or tape recordings, used in connection with
the marketing of the Shares; PROVIDED, HOWEVER, that, solely with regard to
clause (i), the foregoing indemnity agreement with respect to any Prospectus or
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting such losses, claims, damages or liabilities purchased
Shares, or any person controlling the Underwriter, if sufficient copies of the
Prospectus were timely delivered to such Underwriter pursuant to Section 4
hereof and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
given or sent to such person, if required by law to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses related thereto; PROVIDED, HOWEVER,
that the omission to so notify the Company shall not relieve the Company from
any liability which the Company may have to any Underwriter or any such person
or otherwise. Such Underwriter or such person shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for
24
the expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its prior written consent, but if settled with the
written consent of the Company, the Company agrees to indemnify and hold
harmless any Underwriter and any such person from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the indemnifying
party agrees that it shall be liable for any settlement of any Proceeding
effected without the Company's written consent if (i) such settlement is entered
into more than 60 business days after receipt by the indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors, officers, employees and agents and any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished by or on behalf of such Underwriter through you to the Company
expressly for use with reference to such Underwriter in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; PROVIDED, HOWEVER, that the omission to so
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ their or its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company or such person unless the employment of such counsel
shall have been authorized in writing by such Underwriter in connection with the
defense of such Proceeding or such Underwriter shall not have employed counsel
to defend such Proceeding or such
25
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
the Underwriters' written consent if (i) such settlement is entered into more
than 60 business days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at least 30
days' prior notice of its intention to settle. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 9 in respect
of any losses, damages, expenses, liabilities or claims referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other hand
from the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the Shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or
26
omission or alleged omission relates to information supplied by the Company or
by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, damages,
expenses, liabilities and claims referred to in this subsection shall be deemed
to include any legal or other fees or expenses reasonably incurred by such party
in connection with investigating, preparing to defend or defending any
Proceeding.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, in no case shall any Underwriter be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by such Underwriter and distributed to the public
were offered to the public exceeds the amount of any damage which such
Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section 9
and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, its partners, directors,
officers, employees or agents or any person (including each partner, officer,
director, employee or agent of such person) who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors, officers, employees or agents or any
person who controls any of the foregoing within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other of the commencement of any
Proceeding against it and against any of the officers, directors, employees or
agents of the Company in connection with the issuance and sale of the Shares, or
in connection with the Registration Statement or Prospectus.
10. NOTICES. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by telegram and, if to the
Underwriters, shall be sufficient in all respects if delivered or sent to UBS
Securities LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Syndicate
Department; and if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at 000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Chief
Executive Officer and President.
11. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth in
the last sentence on the cover page of the Prospectus, the Underwriters listed
on the cover page of the Prospectus, the list of Underwriters and their
respective participation in the sale of the Shares set forth under the caption
"Underwriting" in the Prospectus, the statements set forth in
27
the two sentences immediately preceding the caption "Underwriting -
Over-allotment Option" in the Prospectus, the statements set forth in the first
paragraph and the last sentence of the second paragraph under the caption
"Underwriting - Commissions and Discounts" in the Prospectus and the statements
set forth under the caption "Underwriting - Price Stabilization, Short
Positions, Passive Market Making" in the Prospectus constitute the only
information furnished by or on behalf of the Underwriters as such information is
referred to in Sections 3 and 9 hereof.
12. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim, counterclaim
or dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement ("Claim"), directly or indirectly, shall be governed
by, and construed in accordance with, the laws of the State of New York. The
Section headings in this Agreement have been inserted as a matter of convenience
of reference and are not a part of this Agreement.
13. SUBMISSION TO JURISDICTION. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and you and the Company
consent to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against an Underwriter or any
indemnified party. Each Underwriter and the Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding thereupon, and may be enforced in any other courts in
the jurisdiction to which the Company is or may be subject, by suit upon such
judgment.
14. PARTIES AT INTEREST. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and, to the extent
provided in Section 9 hereof, the controlling persons, directors, officers,
employees and agents referred to in such section, and their respective
successors, assigns, heirs, personal representatives and executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
15. COUNTERPARTS. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
17. MISCELLANEOUS. UBS Securities LLC, an indirect, wholly owned subsidiary
of UBS AG, is not a bank and is separate from any affiliated bank, including any
U.S.
28
branch or agency of UBS Securities LLC. Because UBS Securities LLC is a
separately organized entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by UBS
Securities LLC are not deposits, are not insured by the Federal Deposit
Insurance Corporation, are not guaranteed by a branch or agency, and are not
otherwise an obligation or responsibility of a branch or agency.
A lending affiliate of UBS Securities LLC may have lending relationships
with issuers of securities underwritten or privately placed by UBS Securities
LLC. To the extent required under the securities laws, prospectuses and other
disclosure documents for securities underwritten or privately placed by UBS
Securities LLC will disclose the existence of any such lending relationships and
whether the proceeds of the issue will be used to repay debts owed to affiliates
of UBS Securities LLC.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
29
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Company and the several Underwriters.
Very truly yours,
FIVE STAR QUALITY CARE, INC.
By: /s/ Xxxxx X. Xxxxxx Xx.
----------------------------
Name: Xxxxx X. Xxxxxx Xx.
Title: Treasurer, Chief Financial
Officer and Assistant Secretary
Accepted and agreed to as of the date
first above written:
UBS SECURITIES LLC
As Representative of the several Underwriters
By: UBS SECURITIES LLC
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Director
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Associate Director
30
SCHEDULE A
UNDERWRITER NUMBER OF FIRM SHARES
UBS Securities LLC............................... 1,720,000
Xxxxxx, Xxxxx Xxxxx, Incorporated................ 570,000
RBC Capital Markets Corporation.................. 570,000
Xxxxxx, Xxxxxxxx & Company, Incorporated......... 570,000
Xxxxxx, Xxxxx & Co., Inc......................... 70,000
----------
Total..................................... 3,500,000
==========
SCHEDULE B
COMPANY JURISDICTION OF FOREIGN QUALIFICATIONS
-------------------------------------------------- --------------------------------------
Five Star Quality Care, Inc.......................... Massachusetts
SUBSIDIARIES JURISDICTION OF FOREIGN QUALIFICATIONS
-------------------------------------------------- --------------------------------------
Alliance Pharmacy Services, LLC...................... Massachusetts
Nebraska
Wisconsin
Affiliates Insurers, Limited......................... None
CCC Boynton Beach, Inc............................... None
Five Star Advertising, Inc........................... None
Five Star Insurance, Inc............................. None
Five Star MD Homes LLC............................... Maryland
Five Star Procurement Group Trust.................... Massachusetts
Five Star Quality Care Holding Co., Inc.............. None
Five Star Quality Care Trust......................... Arizona
California
Kansas
Michigan
Wisconsin
Wyoming
Five Star Quality Care-AZ, LLC....................... Arizona
Five Star Quality Care-CA, Inc....................... California
Five Star Quality Care - CA II, Inc. ................ None
Five Star Quality Care-CA, LLC....................... California
Five Star Quality Care - CA II, LLC.................. California
Five Star Quality Care-Co, Inc. ..................... None
Five Star Quality Care-Colorado, LLC................. Colorado
Five Star Quality Care-CT, LLC....................... Connecticut
Five Star Quality Care-FL, LLC....................... Florida
Five Star Quality Care-GA, LLC....................... Georgia
Five Star Quality Care-GA, Inc....................... None
Five Star Quality Care-IA, Inc....................... Iowa
Five Star Quality Care-IA, LLC....................... Iowa
Five Star Quality Care-KS, LLC....................... Kansas
Five Star Quality Care-MD, LLC....................... Maryland
Five Star Quality Care-MI, Inc....................... Michigan
Five Star Quality Care-MI, LLC....................... Michigan
Five Star Quality Care-MO, LLC....................... Missouri
Five Star Quality Care-NC, LLC....................... North Carolina
Five Star Quality Care-NE, Inc....................... Nebraska
Five Star Quality Care-NE, LLC....................... Nebraska
Five Star Quality Care-VA, LLC....................... Virginia
Five Star Quality Care-WI, LLC....................... Wisconsin
Five Star Quality Care-WI, Inc....................... None
Five Star Quality Care-WY, LLC....................... Wyoming
Five Star Quality Care-Xxxxxxxxx, LLC................ Nebraska
Five Star Quality Care-Ashland, LLC.................. Nebraska
Five Star Quality Care-Blue Hill, LLC................ Nebraska
Five Star Quality Care-Central City, LLC............. Nebraska
Five Star Quality Care-Columbus, LLC................. Nebraska
Five Star Quality Care-Xxxxx, LLC.................... Nebraska
Five Star Quality Care-Exeter, LLC................... Nebraska
Five Star Quality Care-Farmington, LLC............... Michigan
Five Star Quality Care-Grand Island, LLC............. Nebraska
Five Star Quality Care-Gretna, LLC................... Nebraska
Five Star Quality Care-Xxxxxx, LLC................... Michigan
Five Star Quality Care-Xxxxx, LLC.................... Nebraska
Five Star Quality Care-Milford, LLC.................. Nebraska
Five Star Quality Care-Xxxxxxxxxx, LLC............... Nebraska
Five Star Quality Care-Utica, LLC.................... Nebraska
Five Star Quality Care-Waverly, LLC.................. Nebraska
Five Star Seabury, LLC............................... Connecticut
FS Lafayette Tenant Trust............................ Kentucky
Massachusetts
FS Leisure Park Tenant Trust......................... Massachusetts
FS Lexington Tenant Trust............................ Kentucky
FS Tenant Holding Company Trust...................... Arizona
California
Delaware
Florida
Indiana
Kansas
Kentucky
Massachusetts
New Mexico
Ohio
South Carolina
FS Tenant Pool I Trust............................... Delaware
Florida
Massachusetts
New Mexico
South Carolina
FS Tenant Pool II Trust.............................. Arizona
California
Delaware
Florida
Indiana
Massachusetts
FS Tenant Pool III Trust............................. Arizona
Florida
Kansas
Kentucky
Massachusetts
Ohio
FS Tenant Pool IV Trust.............................. Delaware
Florida
Massachusetts
FSQ Crown Villa Business Trust....................... Massachusetts
FSQ Overland Park Place Business Trust............... Kansas
Massachusetts
FSQ Pharmacy Holdings, LLC.................... Massachusetts
Nebraska
FSQ Rio Las Palmas Business Trust.................... California
Massachusetts
FSQ The Palms at Fort Xxxxx Business Trust........... Florida
Massachusetts
FSQ Villa at Riverwood Business Trust................ Massachusetts
FSQ, Inc............................................. Arizona
California
Colorado
Connecticut
Florida
Georgia
Indiana
Iowa
Kansas
Kentucky
Maryland
Massachusetts
Michigan
Missouri
Nebraska
North Carolina
New Jersey
New Mexico
Ohio
South Carolina
Texas
Wisconsin
Wyoming
FSQ/LTA Holdings, Inc................................ None
FSQC Funding Co., LLC................................ Massachusetts
FVEST.XXX, Inc....................................... Missouri
GBH/LTA,LLC.......................................... None
LifeTrust America, Inc............................... None
LifeTrust Properties, LLC............................ None
LTA Management Services, LLC......................... None
LTA Management Services of Florida, LLC.............. None
Morningside Holdings of Concord, LLC................. North Carolina
Morningside Holdings of Gastonia, LLC................ North Carolina
Morningside Holdings of Greensboro, LLC.............. North Carolina
Morningside Holdings of Raleigh, LLC................. North Carolina
Morningside Holdings of Williamsburg, LLC............ Virginia
Morningside of Alabama, L.P.......................... Alabama
Morningside of Xxxxxxxx, X.X......................... South Carolina
Morningside of Athens, Limited Partnership........... Georgia
Morningside of Beaufort, LLC......................... South Carolina
Morningside of Bellgrade, Richmond, LLC.............. Virginia
Morningside of Belmont, LLC.......................... Tennessee
Morningside of Bowling Green, LLC.................... Kentucky
Morningside of Camden, LLC........................... South Carolina
Morningside of Charlottesville, LLC.................. Virginia
Morningside of Cleveland, LLC........................ Tennessee
Morningside of Columbus, L.P......................... Georgia
Morningside of Concord, LLC.......................... North Carolina
Morningside of Xxxxxxx, LLC.......................... Georgia
Morningside of Cookeville, LLC....................... Tennessee
Morningside of Cullman, LLC.......................... Alabama
Morningside of Xxxxxx, Limited Partnership........... Georgia
Morningside of Decatur, L.P.......................... Alabama
Morningside of Xxxxx, Limited Partnership............ Georgia
Morningside of Fayette, L.P.......................... Alabama
Morningside of Franklin, LLC......................... Tennessee
Morningside of Gainesville, LLC...................... Georgia
Morningside of Gallatin, LLC......................... Tennessee
Morningside of Gastonia, LLC......................... North Carolina
Morningside of Georgia, L.P.......................... None
Morningside of Greensboro, LLC....................... North Carolina
Morningside of Xxxxxxxxx, X.X. ...................... South Carolina
Morningside of Hartsville, LLC....................... South Carolina
Morningside of Hopkinsville, L.P..................... Kentucky
Morningside of Xxxxxxx, LLC.......................... Tennessee
Morningside of Kentucky, Limited Partnership......... Kentucky
Morningside of Knoxville, LLC........................ Tennessee
Morningside of Lexington, LLC........................ South Carolina
Morningside of Macon, LLC............................ Georgia
Morningside of Madison, LLC.......................... Alabama
Morningside of Newport News, LLC..................... Virginia
Morningside of Orangeburg, LLC....................... South Carolina
Morningside of Paducah, LLC.......................... Kentucky
Morningside of Paris, L.P............................ Tennessee
Morningside of Raleigh, LLC.......................... North Carolina
Morningside of Seneca, L.P........................... South Carolina
Morningside of Sheffield, LLC........................ Alabama
Morningside of Xxxxxxxx-Xxxxxxxx, LLC................ Virginia
Morningside of South Carolina, L.P. South Carolina
Morningside of Springfield, LLC...................... Tennessee
Morningside of Tennessee, LLC........................ None
Morningside of Williamsburg, LLC..................... Virginia
National LTC Pharmacy Services LLC................... Massachusetts
Nebraska
Senior Living of Boynton Beach Limited Partnership... Florida
The Heartlands Retirement Community -
Ellicott City I, Inc................................. None
The Heartlands Retirement Community -
Ellicott City II,Inc................................. None
SCHEDULE C
DELAWARE SUBSIDIARIES
Alliance Pharmacy Services, LLC
CCC Boynton Beach, Inc.
Five Star Advertising,Inc.
Five Star MD Homes LLC
Five Star Quality Care - AZ, LLC
Five Star Quality Care - CA, Inc.
Five Star Quality Care - CA, LLC
Five Star Quality Care - CA II, LLC
Five Star Quality Care - Colorado, LLC
Five Star Quality Care - CT, LLC
Five Star Quality Care - FL, LLC
Five Star Quality Care - GA, LLC
Five Star Quality Care - IA, Inc.
Five Star Quality Care - IA, LLC
Five Star Quality Care - KS, LLC
Five Star Quality Care - MD, LLC
Five Star Quality Care - MI, Inc.
Five Star Quality Care - MI, LLC
Five Star Quality Care - MO, LLC
Five Star Quality Care - NC, LLC
Five Star Quality Care - NE, Inc.
Five Star Quality Care - NE, LLC
Five Star Quality Care - VA, LLC
Five Star Quality Care - WI, LLC
Five Star Quality Care - WY, LLC
Five Star Quality Care - Xxxxxxxxx, LLC
Five Star Quality Care - Ashland, LLC
Five Star Quality Care - Blue Hill, LLC
Five Star Quality Care - Central City, LLC
Five Star Quality Care - Columbus, LLC
Five Star Quality Care - Xxxxx, LLC
Five Star Quality Care - Exeter, LLC
Five Star Quality Care - Farmington, LLC
Five Star Quality Care - Grand Island, LLC
Five Star Quality Care - Gretna, LLC
Five Star Quality Care - Xxxxxx, LLC
Five Star Quality Care - Xxxxx, LLC
Five Star Quality Care - Milford, LLC
Five Star Quality Care - Xxxxxxxxxx, LLC
Five Star Quality Care - Utica, LLC
Five Star Quality Care - Waverly, LLC
Five Star Quality Care Holding Co., Inc.
Five Star Seabury LLC
FSQ/LTA Holdings, Inc.
FSQ, Inc.
FSQ Pharmacy Holdings, LLC
FSQC Funding Co., LLC
FVEST.XXX, Inc.
LifeTrust Properties, LLC
LTA Management Services, LLC
LTA Management Services of Florida, LLC
Morningside Holdings of Concord, LLC
Morningside Holdings of Gastonia, LLC
Morningside Holdings of Greensboro, LLC
Morningside Holdings of Raleigh, LLC
Morningside Holdings of Williamsburg, LLC
Morningside of Alabama, L.P.
Morningside of Xxxxxxxx, X.X.
Morningside of Athens, Limited Partnership
Morningside of Beaufort, LLC
Morningside of Bellgrade, Richmond, LLC
Morningside of Belmont, LLC
Morningside of Bowling Green, LLC
Morningside of Camden, LLC
Morningside of Charlottesville, LLC
Morningside of Cleveland, LLC
Morningside of Columbus, L.P.
Morningside of Concord, LLC
Morningside of Xxxxxxx, LLC
Morningside of Cookeville, LLC
Morningside of Cullman, LLC
Morningside of Xxxxxx, Limited Partnership
Morningside of Decatur, L.P.
Morningside of Xxxxx, Limited Partnership
Morningside of Fayette, L.P.
Morningside of Franklin, LLC
Morningside of Gainesville, LLC
Morningside of Gallatin, LLC
Morningside of Gastonia, LLC
Morningside of Georgia, L.P.
Morningside of Greensboro, LLC
Morningside of Xxxxxxxxx, X.X.
Morningside of Hartsville, LLC
Morningside of Hopkinsville, L.P.
Morningside of Xxxxxxx, LLC
Morningside of Kentucky, Limited Partnership
Morningside of Knoxville, LLC
Morningside of Lexington, LLC
Morningside of Macon, LLC
Morningside of Madison, LLC
Morningside of Newport News, LLC
Morningside of Orangeburg, LLC
Morningside of Paducah, LLC
Morningside of Paris, L.P.
Morningside of Raleigh, LLC
Morningside of Seneca, L.P.
Morningside of Sheffield, LLC
Morningside of Xxxxxxxx-Xxxxxxxx, LLC
Morningside of South Carolina, L.P.
Morningside of Springfield, LLC
Morningside of Tennessee, LLC
Morningside of Williamsburg, LLC
National LTC Pharmacy Services LLC
Senior Living of Boynton Beach Limited Partnership
SCHEDULE D
MARYLAND SUBSIDIARIES
Five Star Insurance, Inc.
Five Star Procurement Group Trust
Five Star Quality Care Trust
Five Star Quality Care - CA II, Inc.
Five Star Quality Care - Co, Inc.
Five Star Quality Care - GA, Inc.
Five Star Quality Care - WI, Inc.
FS Lafayette Tenant Trust
FS Leisure Park Tenant Trust
FS Lexington Tenant Trust
FS Tenant Holding Company Trust
FS Tenant Pool I Trust
FS Tenant Pool II Trust
FS Tenant Pool III Trust
FS Tenant Pool IV Trust
FSQ Crown Villa Business Trust
FSQ Overland Park Place Business Trust
FSQ Rio Las Palmas Business Trust
FSQ The Palms at Fort Xxxxx Business Trust
FSQ Villa at Riverwood Business Trust
The Heartlands Retirement Community - Ellicott City I, Inc.
The Heartlands Retirement Community - Ellicott City II, Inc.
EXHIBIT A
FIVE STAR QUALITY CARE, INC.
Shares of Common Stock ($.01 Par Value)
[Date]
UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in connection with
the proposed
Underwriting Agreement (the "
Underwriting Agreement") to be entered
into between Five Star Quality Care, Inc. (the "Company") and you, as
Underwriters, with respect to the public offering (the "Offering") of 3,500,000
shares of common stock, $.01 par value, of the Company (the "Common Shares").
In order to induce you to enter into the
Underwriting Agreement, the
undersigned agrees that for a period of 90 days after the effective date of the
Registration Statement on Form S-1 relating to the Offering (the "Registration
Statement") the undersigned will not, without the prior written consent of UBS
Securities LLC, (i) sell, offer to sell, contract to sell, hypothecate, pledge,
grant any option to purchase or otherwise dispose of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder
(the "Exchange Act"), with respect to, any Common Shares of the Company or any
securities convertible into or exercisable or exchangeable for Common Shares,
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Common Shares
or any securities convertible into or exercisable or exchangeable for Common
Shares, whether any such transaction is to be settled by delivery of Common
Shares or such other securities, in cash or otherwise or (iii) publicly announce
an intention to effect any transaction specified in clause (i) or (ii).
If (a) during the period that BEGINS on the date that is 15 calendar days
plus 3 business days before the last day of the 90-day restricted period
described in the foregoing paragraph (the "Lock-up Period") and ENDS on the last
day of the Lock-up Period, the Company issues an earnings release or material
news or a material event relating to the Company occurs or (b) prior to the
expiration of the Lock-up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Lock-up Period, the restrictions imposed by this letter shall continue to apply
until the expiration of the date that is 15 calendar days plus 3
business days after the date on which the issuance of the earnings release or
the material news or material event occurs; PROVIDED, HOWEVER, this paragraph
will not apply if, within 3 days of the termination of the Lock-Up Period, the
Company delivers to UBS Securities LLC a certificate signed by the Chief
Financial Officer or Chief Executive Officer of the Company certifying on behalf
of the Company that the Common Shares are, as of the date of delivery of such
certificate, "actively traded securities," as defined in Regulation M under the
Exchange Act. Such notice shall be delivered in accordance with Section 10 of
the
Underwriting Agreement.
The foregoing restrictions shall not apply to (a) bona fide gifts, provided
the recipient or recipients thereof agree in writing to be bound by the terms of
this Lock-Up Letter Agreement, or (b) if the undersigned is an individual,
dispositions to any entity for the direct or indirect benefit of the undersigned
and/or the immediate family of the undersigned, provided that such entity agrees
in writing to be bound by the terms of this Lock-Up Letter Agreement.
In addition, the undersigned hereby waives any rights the undersigned may
have to require registration of Common Shares in connection with the
Registration Statement. The undersigned further agrees that, for a period of 90
days after the effective date of the Registration Statement, the undersigned
will not, without the prior written consent of UBS Securities LLC, make any
demand for, or exercise any right with respect to, the registration of Common
Shares of the Company or any securities convertible into or exercisable or
exchangeable for Common Shares.
If (i) the Company notifies you in writing that it does not intend to
proceed with the Offering, (ii) the Registration Statement filed with the
Securities and Exchange Commission is withdrawn or (iii) for any reason the
Underwriting Agreement shall be terminated prior to the time of purchase (as
defined in the
Underwriting Agreement), this Lock-Up Letter Agreement shall be
terminated and the undersigned shall be released from his obligations hereunder.
Yours very truly,
---------------------
[Name of Signatory]
